Investigation into Royal Mail’s quality of service performance in 2017/18

Ofcom has today published a non-confidential version of the confirmation decision issued to Royal Mail on 31 May 2019:

Decision to conclude investigation into Royal Mail’s compliance with its quality of service performance standards in 2017/18 (PDF, 528.7 KB)

Having carefully considered Royal Mail’s submissions, Ofcom has concluded that Royal Mail has contravened DUSP condition 1.9.1 by not meeting specified performance targets associated with First Class mail delivery during 2017/18.

Ofcom takes compliance with quality of service targets very seriously. However, in the specific circumstances of this case, we have decided that on this occasion it would not be appropriate to impose a penalty on Royal Mail, in particular because:

• after taking into account the impact of the severe weather in February and March 2018, Royal Mail missed its First Class standards by a relatively small amount;
• the closure of Royal Mail’s defined benefit pension scheme meant 2017/18 was a unique year in Royal’s Mail’s history; and
• Royal Mail took various steps to mitigate the impact of events outside of its control that occurred in 2017/18 and has taken a number of proactive steps to mitigate the impact of events going forward.

Ofcom will publish its full decision shortly.

Following an investigation, we have determined there are reasonable grounds for believing Royal Mail contravened its quality of service obligations under DUSP condition 1.9.1 by not meeting specified performance targets associated with First Class mail delivery during 2017/18. Accordingly, on 4 March 2019 we issued a notification to the company under paragraph 2 of Schedule 7 to the Postal Services Act 2011.

Our investigation found that Royal Mail’s performance was disrupted by certain events beyond its control – in particular, the severe weather in February and March 2018 had a significant impact. After taking this into account, we found the company missed its targets by a relatively small margin. Royal Mail also took various steps to mitigate the impact of events outside of its control that occurred in 2017/18.

In the specific circumstances of this case, we do not intend to impose a financial penalty. Royal Mail now has the opportunity to make representations to us on our provisional decision, before we issue a final decision under paragraph 6 of Schedule 7 to the Postal Services Act 2011.

DUSP condition 1.9.1 requires Royal Mail to meet specified performance targets associated with the quality of service of the provision of universal service products. These targets are important to ensure that consumers receive a satisfactory level of service.

On 11 May 2018 Royal Mail announced that it had not met some of these quality of service targets in 2017/18.

Ofcom takes compliance with quality of service targets very seriously. Having considered Royal Mail’s announcement, we have decided to open an investigation to determine whether there are reasonable grounds for believing that Royal Mail has failed to comply with its obligations under DUSP condition 1.9.1 in respect of the financial year 2017/18.